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Sea Tow Services International, Inc. v. Pontin

March 16, 2009


The opinion of the court was delivered by: Joseph F. Bianco, District Judge


Plaintiff Sea Tow Services International, Inc. ("Sea Tow") brings this action against defendants Duke Pontin, doing business as Spirit Towing ("Spirit") and Sea Tow Florida Keys (collectively, "defendants" or "Pontin"), as well as Duke Pontin individually, asserting claims in trademark under federal and common law, and breach of restrictive covenant, unfair competition and breach of contract under common law, arising from the termination of a licensing agreement ("the Agreement") between Sea Tow and Pontin. Specifically, plaintiff claims that Pontin's continued use of plaintiff's protected trademark, as well as his continued operation of a marine towing business after the valid termination of the Agreement, violated the Agreement and plaintiff's intellectual property rights. Defendant, in turn, challenges the validity of the termination and counter-claims for breach of contract.

During the course of this litigation, defendants have filed a motion to dismiss, as well as a motion to stay the action pending the outcome of litigation ongoing between the parties in Florida state court. The Court denied the motion to dismiss on January 18, 2007*fn1 and denied the motion to stay on April 17, 2007.*fn2 Familiarity with those decisions is presumed.

Defendants now move for summary judgment on plaintiff's trademark-related claims and defendants' breach of contract counter-claim. Plaintiff, in turn, cross-moves for summary judgment on all of its claims and on defendants' counter-claim. For the reasons set forth herein, the Court finds that genuine issues of disputed fact regarding defendants' ability to "cure" violations of the Agreement within the allotted time period, which led to the contract's dissolution, preclude summary judgment on plaintiff's breach of contract claim and defendants' breach of contract counter-claim. Moreover, because plaintiff's other claims necessarily rest upon a finding by this Court that the Agreement was properly terminated as a matter of law, the parties' cross-motions as to those other claims are also denied in their entirety.


A. Facts

The Court has taken the facts described below from the parties' affidavits and exhibits, defendants' and plaintiff's Local Rule 56.1 Statement of Facts filed, respectively, in support of and in opposition to defendants' motion for summary judgment ("Defs.' 56.1" and "Pl.'s 56.1") and plaintiff's and defendants' Local Rule 56.1 Statement of Facts filed, respectively, in support of and in opposition to plaintiff's cross-motion for summary judgment ("Pl.'s Cross 56.1" and "Defs.' Cross 56.1").*fn3

Plaintiff Sea Tow, through one hundred franchisees and licensees, provides twentyfour hour on-call services to the boating communities along the continental United States, as well as locations in Mexico, Canada, Australia, parts of Europe and the Caribbean. (Frohnhoefer Decl. ¶ 3.) In September of 1983, Sea Tow registered its name as well as its trade dress of the color yellow and/or yellow and black lettering on its vessels' hulls with the United States Patent and Trademark Office. (Id. ¶¶ 3, 5-6.) Plaintiff's network is supported by Franchise or License Agreements between it and each of its franchisees/licensees which permit those entities to provide nautical services in geographically-distinct locations, employing plaintiff's name and marks. (Id. ¶ 11.)

Pontin is the owner and sole-proprietor of Spirit Towing f/d/b/a Sea Tow Services Florida Keys. (Pontin Decl. dated April 15, 2008 ¶ 2.) On July 24, 1992, plaintiff and defendants entered into the Agreement, providing defendants with an exclusive "license to use the Marks and Know How for marine assistance, transportation and environmental services" in a specific geographic area. (Frohnhoefer Decl., Ex. B ¶ 1(A-B).)*fn4

Paragraph 2 of the Agreement states, in relevant part:

In order to enable SEA TOW to maintain control over the nature and quality of all services . . . and for the protection of the public and the preservation of SEA TOW's rights, SEA TOW is hereby granted the right to examine and approve the quality of services and products . . . . In particular, Licensee shall conform to the requirements in the annexed Appendix . . . . SEA TOW shall also have the right to examine and approve the manner in which Licensee uses the Marks and Know How and provides services, to insure proper usage of the Marks and know-how by the Licensee. Should SEA TOW reasonabl y object to Licensee's unauthorized use of the Marks or know-how or the quality of services rendered, Licensee shall forthwith cure such reasonable objections. If Licensee fails to cure any reasonable objections made by Licensor within ten (10) days after being notified of the objection, SEA TOW shall have the right at its option to terminate this Agreement pursuant to Paragraph 9.

(Id. ¶ 2.) Paragraph 9(B)(I-V) states, in relevant part:

Because of the value of the Marks and the associated good will, and the danger flowing from lack of quality control or use by a financially disabled party, this Agreement shall automatically and immediately terminate, subject to the cure provisions set forth in paragraph 2, in the event of any of the following:

Any attempt by Licensee to assign or otherwise transfer part or all of this Agreement or any rights granted under this Agreement without the prior written consent of Licensor;

The substantial cessation of Licensed Business by the Licensee . . . .

Breach of the duty to use best efforts . . . .

Failure to cure a substantial default, specifically including reasonable quality control objections under paragraph 2;

If Licensee files a petition under any provision or chapter of any bankruptcy or insolvency laws, or is adjudicated a bankrupt, or if a petition in bankruptcy is filed against Licensee, or if it becomes insolvent or makes an assignment for the benefit of its creditors or any arrangement pursuant to any bankruptcy law, or if ...

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